U.S. stocks suffered their biggest declines this year overnight, oil prices tumbled to a seven-week low and copper fell to a three-month low, adding to selling pressure across Asia.

Jitters over the U.S. corporate earnings season receded to some extent after aluminum giant Alcoa reported a surprise first-quarter profit on gains in its midstream and downstream businesses.

Brent crude prices extended overnight losses, reversing an early gain, and gold retreated after rising for four straight sessions Tuesday, while the euro recovered from its steep losses yesterday as investors awaited Spanish Prime Minister Mariano Rajoy's speech later in the day on the country's recent austerity budget.

Japanese shares retreated for the seventh straight day, dragging the benchmark Nikkei average down 0.8 percent to a two-month low, as a surge in Italian and Spanish bond yields intensified worries that Europe's debt crisis is worsening. The broader Topix index finished down 0.9 percent.

The Cabinet Office said that core machinery orders received by Japan's private sector firms, excluding the volatile ones for ships and orders from electric power companies, increased a seasonally adjusted 4.8 percent in February, signaling a continued recovery in capital spending which could support the economy that is still grappling with deflation, strong yen and the impacts of last year's earthquake. Economists expected orders to fall 0.8 percent following a 3.4 percent gain in the preceding month.

Financial stocks recouped their initial losses following reports that the Bank of Japan may consider easing monetary policy at its upcoming policy-setting meeting on April 27. Sumitomo Mitsui Financial Group eased 0.4 percent and Mitsubishi UFJ Financial Group lost a percent, while Mizuho Financial Group ended 0.8 percent higher.

China's benchmark Shanghai Composite index fluctuated before ending 0.1 percent higher, led by gains in property developers and gold stocks, while Hong Kong's Hang Seng index lost 1.1 percent, dragged down by financial and resource-related shares ahead of a slew of Chinese economic data due this week.

Australian shares fell sharply, as worries about tepid global demand growth for industrial metals and fresh eurozone debt worries weighed on miners. Both the benchmark S&P/ASX 200 and the broader All Ordinaries index ended down a little over a percent each.

BHP Billiton fell 1.9 percent after it approved an initial $708 million in spending on the Gulf of Mexico's Mad Dog oil field. Rival Rio Tinto dropped 2.1 percent and Fortescue lost 1.4 percent, while gold miner Newcrest edged up 0.2 percent as gold prices recovered from last week's more than 2 percent fall.

In the energy sector, Woodside lost 1.9 percent as it delayed its final decision on the controversial Browse gas hub project in WA's North West until mid-2013. Santos fell 1.9 percent, but Oil Search added 0.3 percent. The big four banks ended subdued, with losses ranging between 0.2 percent and 1.1 percent, while investment bank Macquarie Group tumbled 3.2 percent and insurer Suncorp fell 1.5 percent.

In economic news, loans extended to owner occupied housing in Australia declined for a second consecutive month in February, the Australian Bureau of Statistics said. In seasonally adjusted terms, the number of home loans granted fell 2.5 percent month-over-month following 1.1 percent fall in the preceding month.

New Zealand shares followed Wall Street and regional markets lower as rising bond yields of indebted Spain and Italy and worries about the pace of global economic growth sapped demand for riskier assets. The benchmark NZX-50 index lost 0.3 percent. Exporter Fisher & Paykel Healthcare paced the declines, tumbling 5.6 percent to a four-week low as the New Zealand dollar rebounded against the greenback after a private survey showed business confidence in New Zealand improved during the first quarter despite a sideways move in economic activity.

Elsewhere, India's benchmark Sensex was last trading up 0.2 percent, erasing early losses, while Indonesia's Jakarta Composite index was down 0.7 percent and Singapore's Straits Times was down 0.9 percent. Markets in South Korea and Malaysia were closed for holidays.

On Wall Street, stocks suffered their biggest declines this year overnight, with the S&P 500 breaking below a key support level, as traders continued to cash in on the recent strength in the markets following last Friday's disappointing jobs report.

Mixed trade data from China, lingering eurozone debt worries and uncertainty about the upcoming earnings season also added to the downside pressure. The Dow fell 1.7 percent to its lowest closing level in over two months and the S&P 500 lost 1.7 percent to set a one-month closing low, while the tech-heavy Nasdaq shed 1.8 percent.